Raleigh’s New Airbnb Rules Won’t Let You Rent Out Your Whole House

Cynthia Gallon is a registered nurse who works part-time, cares for her elderly mother and disabled brother, and has found a way to stretch her dollars. M.B. Hardy is a sixty-six-year-old empty-nester who enjoys having a supplemental income and interesting company. Colin Keenan lost his job in December and now has a "real sense of meaning and control over my own worth."

They all rent out their homes on Airbnb, and all of them emailed Raleigh city council members recently, asking them to go easy on regulations for short-term rental services. They say they've never had conflicts with their neighbors and only open their home to conscientious visitors.

On the other side, Karen and Paul Johnson, a couple from north Raleigh, say an Airbnb host in their neighborhood "has a revolving door, with guests appearing nightly," causing concerns about safety, parking, and "degradation to the quality of the neighborhood."

"Families in my neighborhood are looking to relocate because they are concerned about current short-term rental activity," Karen Johnson wrote. "I hope they can hide that activity from prospective buyers because, in my view, it will negatively affect their ability to sell their home."

Raleigh has been grappling with how to regulate short-term rental services for more than a year now, since the city received its first anonymous complaint in October 2014 against Five Points resident and Airbnb host Gregg Stebben.

Opposition has ebbed and flowed. One opponent, a national group known as Neighbors for Overnight Oversight, was vocal in the early stages but has been silent for the past year. The Oakwood Inn, Raleigh's last traditional bed and breakfast, closed last June; the owner blamed short-term rental services but has also stayed out of the debate. And since Airbnb agreed to collect sales and hotel-occupancy taxes in Wake County last May, the North Carolina Restaurant and Lodging Association hasn't been engaged either.

Still, short-term rental services are currently illegal in Raleigh, though the city hasn't enforced the law.

After receiving recommendations for regulating short-term rentals from the planning commission last October, the council voted 7–1 to send them back for more study, indicating that the rules were too broad. The commission came back to the council last week with new, more restrictive regulations.

Under a proposed change to the city's unified development ordinance, Airbnb would become legal, but residents could rent out no more than two rooms in their home for less than thirty days. They would also have to apply for an annual permit, and there would be a four hundred-foot buffer from one short-term rental service operator to the next. If your neighbor beats you to the permit, you're out of luck.

Most controversial, residents wouldn't be able to rent out their whole house. Hand in hand with that provision is a requirement for an on-site manager to be present throughout the rental period.

Raleigh's proposal is stricter than regulations in other major cities, including Nashville, San Francisco, Portland, and Philadelphia. Most allow people to rent rooms in their home as well as the entire house when they're gone.

"Today, when families travel together, they want to be able to rent out a whole house to share," says Stebben. "It is not a family-friendly move not to enable a family to rent a whole house while they're on vacation. We are chasing away dollars by not making Raleigh a great destination for families."

Matthew Curtis, the government relations director for HomeAway, a service that rents out whole homes rather than single rooms, says that communities that restrict whole-home rentals only drive that market underground.

"The compliance with local rules is not being achieved, and taxes aren't being remitted," Curtis says. "There is not one single example of a community in the world that has effectively been able to regulate against the demand for this kind of rental activity."

Planning commission chairman Steve Schuster told the council that he'd heard from many short-term rental advocates who wanted whole-house rentals, but ultimately, the commission left that decision to the council.

"The text-change committee developed the proposed text change they felt was the right balance," Schuster says. "But I want [the council] to know a lot of people we heard from felt a broader ordinance would be appropriate."

Stebben says he's disappointed the whole-house provision wasn't debated more, though it's sure to come up again at an upcoming public hearing on June 7. The city has been testing short-term rentals for the past year, he says, but has experienced few problems.

City records back up that assertion. Raleigh records administrator Lisa Coombes says that complaints have been lodged against only seven of the roughly five hundred purveyors of short-term rentals in Raleigh.

It seems likely the commission's proposed regulations are restrictive enough to appease skeptical council members like Kay Crowder, who specifically requested the permit requirement, while allowing sharing-economy advocates like Bonner Gaylord and Mary-Ann Baldwin, who prefer more permissive rules, to not be seen as voting against Airbnb.

But Stebben believes the council's scheduled hearing is premature, because the whole-house issue hasn't been properly vetted.

"I think this is the weirdest thing," Stebben says. "The whole-house issue has important economic factors attached; let's take time to debate it or make a plan before moving this ahead. I can't imagine a public hearing is a very effective way of debating. Even if three hundred people show up and say, 'I love whole-house short-term rentals,' it will just be kicked back to someone else, anyway. This is a microcosm of a really dysfunctional government."